Calculate the expected return on investment for a new channel opportunity to build your business case.

Objective

Develop a simple but credible ROI model for a channel test. This helps secure budget approval and sets realistic expectations.

Instructions

Pick one new channel idea you want to pitch internally. Build a rough ROI model for one campaign in that channel.

Step-by-Step Model

Step 1: Estimate Reach

How many people will see your message?

Example (Newsletter sponsorship):

• Newsletter has 10,000 subscribers
• Average open rate: 50%
• Reach: 5,000 people

Step 2: Estimate Click-Through

What % will click your CTA?

Example:

• Industry benchmark CTR for newsletter ads: 2%
• 5,000 opens × 2% CTR
• Clicks: 100

Step 3: Estimate Conversion

What % of clicks will convert to your goal (trial, demo, lead)?

Example:

• Landing page converts at 10% (based on current pages)
• 100 clicks × 10% conversion
• Trials: 10

Step 4: Estimate Sales Conversion

What % of trials become customers?

Example:

• Your trial-to-paid rate: 20%
• 10 trials × 20%
• Customers: 2

Step 5: Calculate Revenue

What's each customer worth?

Example:

• Annual contract value: $5,000
• 2 customers × $5,000
• Revenue: $10,000

Step 6: Calculate Cost

What will the campaign cost?

Example:

• Newsletter sponsorship: $2,000
• Creative production: $0 (using in-house)
• Total Cost: $2,000

Step 7: Calculate ROI

ROI = (Revenue - Cost) / Cost × 100%

Example:

• ROI = ($10,000 - $2,000) / $2,000 = 4× or 400%
• Payback = $2,000 / $10,000 = 0.2 campaigns (or immediate positive return)

Build Conservative Scenario

Now create a conservative scenario with worse rates:

Conservative example:

• Open rate: 40% → 4,000 opens
• CTR: 1.5% → 60 clicks
• Conversion: 8% → 5 trials
• Trial-to-paid: 15% → 0.75 customers (round to 1)
• Revenue: 1 × $5,000 = $5,000
• Cost: $2,000
• Conservative ROI: 1.5× or 150%

Still positive, but less dramatic.

Create Comparison

Compare to your current best channel:

Example:

• Current best: LinkedIn Ads at 2× ROI
• Newsletter test: 4× ROI (base) or 1.5× (conservative)
• Conclusion: Even conservative scenario outperforms LinkedIn slightly, and base case is 2× better

Deliverable Template

Channel Opportunity: [Name]

Assumptions:

Reach: ___
CTR: ___%
Conversion: ___%
Trial-to-Paid: ___%
Customer Value: $_____
Campaign Cost: $_____

Base Case:

Expected Customers: ___
Expected Revenue: $_____
Cost: $_____
ROI: ___×

Conservative Case:

Expected Customers: ___
Expected Revenue: $_____
Cost: $_____
ROI: ___×

Comparison to Current Channels:

Current best channel: ___ at ___× ROI
New channel base case: ___× ROI
New channel conservative: ___× ROI

Recommendation:

[2-3 sentences on whether to test and why]

Example Output

Channel Opportunity: "DevOps Weekly" newsletter sponsorship

Base Case ROI: 4× with 2 customers from $2,000 investment

Conservative ROI: 1.5× with 1 customer from $2,000 investment

Current Best: LinkedIn Ads at 2× ROI

Recommendation: We should test this channel. Even in our conservative scenario, it matches our current performance, and the base case shows potential to be our most efficient channel. The $2,000 investment is low-risk and will give us valuable data on newsletter sponsorships as a channel category.

Pro Tips

Use Industry Benchmarks:

• Newsletter ads: 1-3% CTR typical
• Podcast sponsorships: 0.5-2% conversion typical
• Reddit ads: 0.5-1% CTR typical for B2B
• Webinars: 30-40% attendance, 10-20% convert to demo

Include Time Value:

• Note how long until you'd see ROI (some channels take months)
• Account for CAC payback period

Be Transparent:

• Show your assumptions clearly
• Explain where numbers come from
• Acknowledge uncertainty

Discussion Questions

• Which assumption has the biggest impact on ROI?
• How would you validate your assumptions before launching?
• What ROI threshold makes a test worth running?
• How does customer LTV change the picture?

Outcome

You've built a simple but defensible financial model that turns a channel idea into a business case. This one-slide analysis can be the difference between getting budget approval and having your idea dismissed. Even if your assumptions are wrong, the framework shows you think like a business owner, not just a marketer.